"Sprites" as defined by SNK

Structure of a grouped sprite. The red sprite drives the other 3.

Sprites on the NeoGeo aren't like those on other systems.

They're made of tiles (sometimes called characters) coming from the C ROMs, or from the .SPR files on the NeoGeo CD. Those tiles are always 16x16 pixels in size and can contain 15 colors (the color index 0 is used for transparency).

Sprites are vertical strips of tiles, with a fixed width of 1 tile (16 pixels), and an adjustable height of up to 32 tiles (512 pixels).
Each sprite has its own tile and attributes map, defining which tile goes in which place, how is it flipped, and which palette to use.
Sprites can be stuck together horizontally to make huge moveable objects.

Limitations

No more than 96 sprites can be rendered by scanline. Any others won't be displayed (priority: 1 is in the back ?).

Even if the VRAM has space for 448 sprites, only 381 can be displayed per frame. This is imposed by the GPU's architecture.

Contrary to common belief sprites can't be zoomed, they can only be shrunk. Graphics for sprites then have to be drawn to the biggest size needed.

A lot of games contain pre-stretched graphics for sprites which are seen scaled down most of the time ("crashing" logos in title screens for example).

1048576 tiles can be addressed (20 bits, 128MiB of graphics), if more tiles are needed then the sprites graphics need to be bankswitched.